News / National
2% tax headache for Mnangagwa
14 Oct 2018 at 09:55hrs | Views
President Emmerson Mnangagwa's government violated the law by gazetting a legal instrument that put into force the 2 cents tax on electronic transactions as part of a cocktail of austerity measures, former Cabinet ministers and legal experts warned yesterday.
On Friday, the government gazetted Statutory Instrument 205 of 2018, Finance (Rate and Incidence of Intermediated Money Transfer Tax) Regulations, 2018; following proposals by Finance minister Mthuli Ncube.
The tax deductions began yesterday and it is feared they will push prices of goods and services up.
Mnangagwa was last week forced to defend the austerity measures after a foreign currency shortage saw prices of basic commodities skyrocketing and a number of businesses were forced to shut down.
According to the legal experts and former ministers, Statutory Instrument 205 of 2018 can be legally challenged and has the potential of embarrassing the government.
Former Finance minister Tendai Biti said he was confident the new tax regime would be challenged in court as Ncube could not introduce a new law without involving Parliament.
He said Section 3(2) of the Finance Act purports to give the minister power to make regulations, but there was no regulation that could override an Act of Parliament.
"It is a legal nullity. The minister can't override an Act of Parliament. He can't amend an Act of Parliament," Biti said.
"Section 3 (2) of the Finance Act allows a minister to effect revenue measures, but those measures are only operative, they are only conditional if simultaneous with the new measure, there is a Finance Bill that is tabled before Parliament."
He added: "The Finance Bill is tabled during a budget and this is where a minister can say with effect from midnight, the cost of carbon tax is going up by 20% because the Finance Bill is already before Parliament.
"But it is not there in this matter. In the absence of the Finance Bill, the new tax regime is null and void.
"The transaction act of a flat 5c tax is actually in an Act of Parliament. So a minister cannot in a beerhall amend an Act of Parliament. Lawyers are going to expose this illegality.
"I have no doubt that it is going to be challenged. It is illegal; government will have to reverse that because it was done in the absence of the regulations. Government has a duty to reimburse that money."
Only Parliament, Biti said, had the right to make laws in Zimbabwe.
"The Finance Act is an Act of Parliament and only Parliament can amend laws," he said.
"When the minister makes revenue proposals, he makes them through Parliament when he is presenting the budget and he will have power through the regulations that some of these measures can come into effect immediately.
"The Finance Act allows that, but only when it is before Parliament. In this case, the Finance Act is not before Parliament and whatever changes made to the laws should be linked to the existing law.
"He [Finance minister Mthuli Ncube] only has a window to announce the new measures through the Finance Bill. He is weeks away from presenting the budget, I don't know why the hurry," Biti said.
Biti's sentiments were echoed by former Education minister David Coltart, who described Ncube's statutory instrument as unlawful.
"Let us be clear — Section 3 of the Finance Act gives the minister of Finance the right to change tax rates by a statutory instrument authorised by laws already in the Finance Act, but it does not give him powers to repeal the Act or sections of it. That is unlawful," Coltart tweeted yesterday.
Arnold Tsunga, the director of the Africa regional programme of the International Commission of Jurists, also took to Twitter to condemn the regulations.
"When a highly respected professional makes elementary errors like the new Zimbabwe Finance minister Prof Mthuli Ncube does by promulgating a statutory instrument in which he ‘repeals' a section of an Act of Parliament, it raises questions of competency, understanding and capacity," he said.
The MDC Alliance said the new tax must be reversed because its introduction was illegal.
"The so-called statute is unconstitutional in two ways. Firstly, Parliament's primary lawmaking power cannot be delegated and, secondly, a statutory instrument cannot repeal an Act of Parliament neither can it be in opposition of an enabling Act," MDC spokesperson Jacob Mafume said in a statement.
Information ministry permanent secretary Nick Mangwana referred questions to Attorney-General Prince Machaya.
Machaya was not reachable on his mobile phone.
However, Justice ministry permanent secretary Virginia Mabhiza said Ncube was empowered to enact new regulations.
"In terms of the law, the minister is allowed to make regulations derived from an Act of Parliament. The minister is authorised to make regulations," she said.
"He has the power. He can't amend an Act of Parliament, but he can make regulations.
"We don't want to mislead people that the minister has no powers to amend regulations, he cannot amend an Act, not regulations."
Mnangagwa last week said Zimbabweans should be prepared to take the pain if they wanted to see economic revival and the 2 cents tax was the beginning.
On Friday, the government gazetted Statutory Instrument 205 of 2018, Finance (Rate and Incidence of Intermediated Money Transfer Tax) Regulations, 2018; following proposals by Finance minister Mthuli Ncube.
The tax deductions began yesterday and it is feared they will push prices of goods and services up.
Mnangagwa was last week forced to defend the austerity measures after a foreign currency shortage saw prices of basic commodities skyrocketing and a number of businesses were forced to shut down.
According to the legal experts and former ministers, Statutory Instrument 205 of 2018 can be legally challenged and has the potential of embarrassing the government.
Former Finance minister Tendai Biti said he was confident the new tax regime would be challenged in court as Ncube could not introduce a new law without involving Parliament.
He said Section 3(2) of the Finance Act purports to give the minister power to make regulations, but there was no regulation that could override an Act of Parliament.
"It is a legal nullity. The minister can't override an Act of Parliament. He can't amend an Act of Parliament," Biti said.
"Section 3 (2) of the Finance Act allows a minister to effect revenue measures, but those measures are only operative, they are only conditional if simultaneous with the new measure, there is a Finance Bill that is tabled before Parliament."
He added: "The Finance Bill is tabled during a budget and this is where a minister can say with effect from midnight, the cost of carbon tax is going up by 20% because the Finance Bill is already before Parliament.
"But it is not there in this matter. In the absence of the Finance Bill, the new tax regime is null and void.
"The transaction act of a flat 5c tax is actually in an Act of Parliament. So a minister cannot in a beerhall amend an Act of Parliament. Lawyers are going to expose this illegality.
"I have no doubt that it is going to be challenged. It is illegal; government will have to reverse that because it was done in the absence of the regulations. Government has a duty to reimburse that money."
Only Parliament, Biti said, had the right to make laws in Zimbabwe.
"The Finance Act is an Act of Parliament and only Parliament can amend laws," he said.
"When the minister makes revenue proposals, he makes them through Parliament when he is presenting the budget and he will have power through the regulations that some of these measures can come into effect immediately.
"The Finance Act allows that, but only when it is before Parliament. In this case, the Finance Act is not before Parliament and whatever changes made to the laws should be linked to the existing law.
"He [Finance minister Mthuli Ncube] only has a window to announce the new measures through the Finance Bill. He is weeks away from presenting the budget, I don't know why the hurry," Biti said.
Biti's sentiments were echoed by former Education minister David Coltart, who described Ncube's statutory instrument as unlawful.
"Let us be clear — Section 3 of the Finance Act gives the minister of Finance the right to change tax rates by a statutory instrument authorised by laws already in the Finance Act, but it does not give him powers to repeal the Act or sections of it. That is unlawful," Coltart tweeted yesterday.
Arnold Tsunga, the director of the Africa regional programme of the International Commission of Jurists, also took to Twitter to condemn the regulations.
"When a highly respected professional makes elementary errors like the new Zimbabwe Finance minister Prof Mthuli Ncube does by promulgating a statutory instrument in which he ‘repeals' a section of an Act of Parliament, it raises questions of competency, understanding and capacity," he said.
The MDC Alliance said the new tax must be reversed because its introduction was illegal.
"The so-called statute is unconstitutional in two ways. Firstly, Parliament's primary lawmaking power cannot be delegated and, secondly, a statutory instrument cannot repeal an Act of Parliament neither can it be in opposition of an enabling Act," MDC spokesperson Jacob Mafume said in a statement.
Information ministry permanent secretary Nick Mangwana referred questions to Attorney-General Prince Machaya.
Machaya was not reachable on his mobile phone.
However, Justice ministry permanent secretary Virginia Mabhiza said Ncube was empowered to enact new regulations.
"In terms of the law, the minister is allowed to make regulations derived from an Act of Parliament. The minister is authorised to make regulations," she said.
"He has the power. He can't amend an Act of Parliament, but he can make regulations.
"We don't want to mislead people that the minister has no powers to amend regulations, he cannot amend an Act, not regulations."
Mnangagwa last week said Zimbabweans should be prepared to take the pain if they wanted to see economic revival and the 2 cents tax was the beginning.
Source - the standard
